Contract Flash Points - Part 1 : Drafting Your Contract

In the first in a series of four articles looking at key issues

that arise when neogtiating contracts, Simon Tolson begins by

reviewing some of the problems that can arise when drafting your

contract.

Drafting your contract

The most important features of the legal relations between the

contractor and the employer are defined and governed by a contract;

well that is the intention of good contract drafting. Construction

contracts tend to be highly specialised and comprehensive

documents. They are unlike most other commercial contracts, since

they generally govern a continuing relationship rather than a more

fleeting transaction like buying or selling a commodity.

As is well known Contract law in England is based upon a series

of doctrines, notably the idea that the two parties negotiate an

agreement, they agree the terms (usually after some haggling) and

then they execute a contract. The transaction i.e. 'the

business' can then take place. The fact that construction

contracts take place over extensive periods, 5 years is not

unusual, is not a feature that always enables the easy application

of general contract law. Many aspects of contract law are

inadequate for dealing with the inevitable tensions which arise as

a consequence of the contract adjustments made and the conflict

processes without renegotiation – and that is where much

of the heat is generated in the engine room of the dispute

machine.

How often is it that the deal is closed but then on closer

scrutiny one sees it is not articulated as the courts might presume

of businessmen, and the perceptions of the parties continuously

change as the work progresses. The reality is that there will be a

steady flow of information between employer, consultants and

contractor. This results in incremental changes to the original

contract until the signed contract documents (as a snapshot) no

longer reflect the real situation. In other words, the essential

conflict within the process renders the agreements dynamic and well

transient. Moreover, as work proceeds the relative bargaining

potency of the parties are constantly adjusting. Standard

approaches to contracting simply take no account of this that is

why sometimes one or other party can have the upper hand at a given

time during the currency of the contract.

This might all be down to one symptom, after all it has been

said: 'Lawyers have two common failings. One – they

do not draft well. Two – they think they do' (ALA,

1970). Or, put another way, "One man's meat is another

man's poison" in many contracts;

It can take a few sweet words to turn the contract into

Armageddon. Is it in arcane language? Is it bad drafting or a blend

of both?

Twenty-five years ago, the National Consumer Council was

advocating plain language in consumer contracts and even drafted a

bill – the Plain Language Act 1985. Consumers at least

are now protected against obscure language to some extent; one need

only look at car rental agreements, HP Agreements, passports,

driver's licences etc.

In the past 25 years since I came into this profession the

English has become plainer, standard forms have become clearer,

Parliamentary drafting has improved (except in cases such as the

new Construction Act where we seem to be going backwards), and

standard precedents produced by major law firms show plain language

influence – logical order, indexes, good layout, short

paragraphs. However, bespoke drafting has improved little.

The causes are not hard to...